Carnival to Dump Six Ships

[emam]

4 minutes ago, grapau27 said:

Hope you enjoyed the video of Oceana leaving.

She was blowing her horn most of the way down the Tyne and it was lovely seeing her sailing again.

 

Yes I did, I read the posts first as my battery is nearly out, but have just watched it. 

 

As an aside Pauline looks great, much better than my lockdown hair.

[grapau27]

11 minutes ago, emam said:

 

Yes I did, I read the posts first as my battery is nearly out, but have just watched it. 

 

As an aside Pauline looks great, much better than my lockdown hair.

Thanks.

Pauline went to her hairdresser and I went to my barbers this morning.

We had a Mcdonalds meal afterwards sitting in the car overlooking Seaham beach then went to see Oceana leave and had a walk along South Shields beach tonight.

Graham

Edited July 4, 2020 by grapau27

[No pager thank you]

2 hours ago, Manx buoy said:

Can’t disagree with what your saying about keeping customers informed but in the real world it will never happen did Flybe or Monarch tell their pax don’t bother booking we’re going bust in 18 hours? No they didn’t. At any time all the ships are for sale at the right price whether for scrap or future use so don’t think the companies think about us SLF for one second

Spot on.  In the real world, passenger sentiment is often a second order issue and given little attention from the likes of the CMA and the Aviation and Travel Regulators etc.  Refunds current case in point (and more problems on the way with those), Flybe and Monarch good case studies.  Add in Thomas Cook.

 

All the passenger can do if they get screwed over in a way they find unacceptable is to not reward the company concerned (if it still exists) with their repeat custom.  Plus, fairly call out the company concerned to warn others.

[wowzz]

12 minutes ago, grapau27 said:

We had a Mcdonalds meal afterwards

Graham, you certainly know how to impress a lady! 

[mercury7289]

19 minutes ago, grapau27 said:

Thanks.

Pauline went to her hairdresser and I went to my barbers this morning.

We had a Mcdonalds meal afterwards sitting in the car overlooking Seaham beach then went to see Oceana leave and had a walk along South Shields beach tonight.

Graham

What a wild life you lead!!😄

 

We sat in our chairs today waiting for supermarket food delivery, watching the grass grow, I month to go! 

 

We can do it!

[Britboys]

1 hour ago, jeanlyon said:

Who has said she leaving the fleet.  I can't find an announcement?

There hasn't been any announcement Jean. No concrete evidence but some that is very strong anecdotally from different sources...

[grapau27]

35 minutes ago, mercury7289 said:

What a wild life you lead!!😄

 

We sat in our chairs today waiting for supermarket food delivery, watching the grass grow, I month to go! 

 

We can do it!

Apparently counting leaves on a tree is good for you.🤓

[mercury7289]

Just now, grapau27 said:

Apparently counting leaves on a tree is good for you.🤓

We tried that, but very difficult in the wind!

[drsel]

Who has said she leaving the fleet.  I can't find an announcement?

don't worry, it is mere speculation by the so-called cruise "experts"

There are many older ships which ought to go first.

 

Costa Victoria (already sold for scrap), Costa Mediterranean and Costa Neo romantica being three of the six ships to go, in my opinion.

[drsel]

We tried that, but very difficult in the wind!

Dear Graham and Mercury, With all your experience and wisdom, try analysing cruise prices and find out which are the best value, instead of counting leaves or watching the grass grow[emoji6] 

 

 

[Selbourne]

1 hour ago, drsel said:

don't worry, it is mere speculation by the so-called cruise "experts"

There are many older ships which ought to go first.

 

Costa Victoria (already sold for scrap), Costa Mediterranean and Costa Neo romantica being three of the six ships to go, in my opinion.

Although I know nothing about this personally, two very reliable posters have both separately heard that she is going, so I suspect that there is some truth in it. P&O will inevitably have an over capacity issue for the next few years until the cruise market (and future demand) returns to pre Covid 19 levels and, sadly, the most likely (and sensible) way to address this is to lose a ship. The older ships will always be first on the list to go as they are more expensive to run and have less features that modern cruisers demand (e.g. they have a lower proportion of balcony cabins). Aurora has recently had a refit, so is probably secure for now and whilst Arcadia is our least favourite ship in the fleet, I believe that she has slightly better facilities than Oceana and seems to be more popular with the traditional U.K. cruisers.

 

As for the fact that there has been no announcement, we are told by a reliable source that an announcement will be made at the end of next week, or very soon after. The fact that Oceana cruises will still be on sale for the next week or so means nothing. P&O will continue to sell cruises on the ship right up until the date of a market announcement. That’s how business works and there are also strict rules for any listed company on how and when they release information to markets, especially if it’s likely to affect share prices, to avoid people playing the markets based on inside information (which is illegal). Also, as we know, P&O has been selling cruises on all its ships this year that all but those with their heads firmly buried in the sand knew were never going to happen! As each month goes by their cash flow will get more and more stretched and, although immoral, taking money from customers for cruises that won’t happen and then taking many months to refund them are all part of the master plan to help keep them afloat. 

As an aside, I think it is unfortunate when those who have a lot of knowledge are dismissed in a disparaging way as being ‘experts’. Before my wife and I had the benefit of travelling on all the P&O ships we gleaned a lot of very useful information from those who had more cruise experience than us. Now that we have a lot more knowledge, I simply try to return the favour and I know that the vast majority of people seeking useful info are grateful for that. There are, however, plenty of people with more knowledge than me about certain issues and if that makes them experts then I would use the term in a complementary way, rather than in a sarcastic way that implies jealousy because they know more than me. 

[grapau27]

1 hour ago, drsel said:

Dear Graham and Mercury, With all your experience and wisdom, try analysing cruise prices and find out which are the best value, instead of counting leaves or watching the grass grow 

 

 

After having 2 cruises and a Florida holiday already cancelled this year through covid19 with no realistic restart of cruising in sight and long waits for and still waiting for some flight refunds checking cruise prices is low priority at the moment.

[drsel]

Dear Selbourne, thanks for the detailed explanation.

I am just wondering who will spend millions of dollars to buy old cruise ships right now.

 

Costa Victoria was sold for scrap and apparently scrap value is less than 1% of the cost of the ship.

 

Does anyone have any idea in which month Oceana may possibly leave the fleet?

Which will be her last sailing and which ship will replace her?

 

 

[AndyMichelle]

23 minutes ago, drsel said:

Dear Selbourne, thanks for the detailed explanation.

I am just wondering who will spend millions of dollars to buy old cruise ships right now.

 

Costa Victoria was sold for scrap and apparently scrap value is less than 1% of the cost of the ship.

 

Does anyone have any idea in which month Oceana may possibly leave the fleet?

Which will be her last sailing and which ship will replace her?

 

 

As you said earlier, it is all speculation but the people starting these rumours have a track record of sharing accurate information. 

I didn't believe it was imminent yesterday, now I do. 

But, I know it is speculation, we will have to wait and see. 

Andy 

[Selbourne]

45 minutes ago, drsel said:

Dear Selbourne, thanks for the detailed explanation.

I am just wondering who will spend millions of dollars to buy old cruise ships right now.

 

Costa Victoria was sold for scrap and apparently scrap value is less than 1% of the cost of the ship.

 

Does anyone have any idea in which month Oceana may possibly leave the fleet?

Which will be her last sailing and which ship will replace her?

 

 

I’ve no idea who, if anyone, is in the market for 2nd hand cruise ships and suspect that supply will exceed demand for some years, but the lack of a buyer won’t necessarily stop a cruise line removing a vessel from it’s fleet. The running costs of cruise ships are enormous and with capacity likely to exceed demand for a few years it could make more sense to let a ship go for peanuts (relatively speaking!) than to run an over capacity fleet. Retailers use a term ‘going dark’ for loss making shops, where the losses are less by shutting the doors permanently and just paying the fixed costs (mostly rent) until the lease expires, or they sell the asset, than to continue to trade paying all the variable costs (staff wages, heat, light, air con etc) on top, as the profit generated from sales is less than the additional operating costs to achieve them. 
 

That being said, the oldest ships in P&O’s fleet are considerably newer than many cruise ships in use by some other lines (CMV and Fred Olsen come to mind) so it could be beneficial for a cruise line to use a P&O cast off to displace an older ship of their own. However, as a previous poster rightly said, the oldest P&O ships are an awkward size as they are too small for the big operators but too big for the more boutique players in the market, whose point of difference is often that they visit smaller ports that the larger ships can’t get to. I stress that I have no knowledge whatsoever of what P&O’s intentions are, but it makes sense to me (sadly) that they lose a ship. Unfortunately, if they can’t get off the hook for Iona 2, I fear that yet another ship could bite the dust in a few years time. 

[showingdiva]

12 minutes ago, Selbourne said:

That being said, the oldest ships in P&O’s fleet are considerably newer than many cruise ships in use by some other lines (CMV and Fred Olsen come to mind) so it could be beneficial for a cruise line to use a P&O cast off to displace an older ship of their own. However, as a previous poster rightly said, the oldest P&O ships are an awkward size as they are too small for the big operators but too big for the more boutique players in the market, whose point of difference is often that they visit smaller ports that the larger ships can’t get to. I stress that I have no knowledge whatsoever of what P&O’s intentions are, but it makes sense to me (sadly) that they lose a ship. Unfortunately, if they can’t get off the hook for Iona 2, I fear that yet another ship could bite the dust in a few years time. 

 

I totally agree with this.   Carnival already had an older sister ship of Oceana sale listed prior to CV19, which I believe is Sun Princess.   Marella have retired Celebration and CMV are likely to lose Astoria, Marco Polo and Magellan.   Plus the latest news that Costa Victoria is going for scrap, despite her relatively young age of 24.   Fred Olsen are being tight lipped about, well, everything.   However, I wouldn't be at all surprised should there be an announcement of the cancellation of "Iona2" and Cunard's new Queen.  

[molecrochip]

1 hour ago, drsel said:

Dear Selbourne, thanks for the detailed explanation.

I am just wondering who will spend millions of dollars to buy old cruise ships right now.

 

Costa Victoria was sold for scrap and apparently scrap value is less than 1% of the cost of the ship.

 

Does anyone have any idea in which month Oceana may possibly leave the fleet?

Which will be her last sailing and which ship will replace her?

 

 

Let’s put it like this, a ship is generally sold when it has reached 10-15% of its original value. During its use, it will have enabled income of way more than its original and running costs (I.e. net profit) so making a loss on the final sale is a paper issue only.
 

If you have a ship that’s due to go in say, 2 years, and in that time you need maintenance and a dry dock which maybe total £30m+ then your calculation changes to look at total cost over next two years. Bear in mind that this is a company who would rather have £5m in the bank now from a sale and then £30m less costs over the next 2 years to conserve cash.

Add in the some extra factors: 1. Maybe the smaller cruise line set to buy the ship might not still be in business; 2. Surplus capacity in the market devaluing a ship for sale; 3. The ability to transfer 90%+ of passengers booked on this ship to alternative voyages in the remaining fleet thus not loosing income; 

 

These are my thoughts rather than insight but you can see why, today, as opposed to 9 months ago, it may now make sense. Sadly.

Edited July 5, 2020 by molecrochip

[jeanlyon]

Well I would agree about one thing.  the fact that they are selling cruises on all their ships means absolutely nothing.  We had a cruise booked on Adonia and also on Oriana, both of which we had to change as they sold the ships.

[No pager thank you]

16 minutes ago, Selbourne said:

I stress that I have no knowledge whatsoever of what P&O’s intentions are, but it makes sense to me (sadly) that they lose a ship. Unfortunately, if they can’t get off the hook for Iona 2, I fear that yet another ship could bite the dust in a few years time. 

A helpful post, thank you Selbourne.

 

The (American) phrase, "go big, or go home," comes to my mind.  What you have seen so far from Carnival is that their previous strategic intent has simply been accelerated by the virus, not fundamentally changed.  The strategy still implies that more, and more people, and different clientele will flow to larger hotel like cruise ships by the time their capital commitments are paid for.

 

In a way, Carnival are "doubling down," instead of turning the lights out on any of her larger ships, which may be very expensive liabilities (particularly around staffing and kit out, if not maintenance), in the medium term.

 

One hopes that this is not true but the next ship being contemplated for a reduced sale/fire price (as opposed to willingness to sale at the "right price"), will be one of the remaining smaller ships, I would advance as Arcadia.  I would assume that this will not advance until Gala / Iona 2 comes online because otherwise there will be too many excess customer bookings on the order books.  A clue may be to look at the itineraries for Arcadia and Aurora relative to the other ships in the next brochure release.

[molecrochip]

3 minutes ago, showingdiva said:

However, I wouldn't be at all surprised should there be an announcement of the cancellation of "Iona2" and Cunard's new Queen.  

No plans for such announcement. Finance on new ships are a bit like a mortgage on a new build house. They are already in place. The cancellation of a new build shows you have no confidence in the market.

 

Additionally, new ships are cheaper to run and more efficient. Carry more passengers thus higher net income.

 

Older ships will leave the fleet.

[AchileLauro]

10 minutes ago, jeanlyon said:

Well I would agree about one thing.  the fact that they are selling cruises on all their ships means absolutely nothing.  We had a cruise booked on Adonia and also on Oriana, both of which we had to change as they sold the ships.

Yes we too have been caught twice by cancellations of long standing bookings at short or in one case absolutely no notification.

[molecrochip]

As harsh as it is, I see a staggered start come October which means not every itinerary is going to sail. I don’t think we’ve see the last cancellations. Sadly, some people will get caught.

[No pager thank you]

4 minutes ago, AchileLauro said:

Yes we too have been caught twice by cancellations of long standing bookings at short or in one case absolutely no notification.

Recent precedents around what happens when this occurs are unequal and don't always align with the original booking conditions for cancellations by P&O:

 

Adonia sale - no compensation

Oriana sale - £75 OBC provided a new cruise was booked within a month.

Very short notice Ventura festive 2019 season cancellation (technical issues) - 20% OBC

 

I would suggest that in Oceana's case, assuming substance to yesterday's rumours, the answer will be different again - as there will be a preference to move her itineraries to other ships, therefore not cancel the bookings.

 

These particular changes will be "within" P&Os control, as they are commercially orientated.

 

May be either that (accept a transfer) or take 100/110% FCC to use against another booking.

[No pager thank you]

6 minutes ago, molecrochip said:

As harsh as it is, I see a staggered start come October which means not every itinerary is going to sail. I don’t think we’ve see the last cancellations. Sadly, some people will get caught.

I agree - a staggered start seems likely.

 

I do feel for anyone who gets caught having paid full balances which will be a problem if the stagger announcement comes from August onwards - their choices will not be that great:

 

-- 3 months plus for a refund (60 day compliance patchy), ergo possibly not reimbursed in time for Christmas.

-- 125% FCC against a heavy order book for 2021, probably meaning that they will owe more to rebook, unless they are happy to accept a low season cruise alternative.

-- Defer their holiday and balance for a minimum of 18 months so that they can take advantage of more reasonable prices in the 2022 / 23 brochure.

 

Meanwhile, they will see some cruises going and will most likely have missed out entirely on their preferred holiday in 2020.  Sad really, just a sign of the current unprecedented times.

[davecttr]

Calculated in 2000 passenger ship equivalents Iona represents a 32% increase in fleet capacity. In the present/medium term it might be financially better to reduce fleet capacity by 3 ship equivalents.